Avert your eyes from the stock sell-off. Inflation, not the market, is the variable to watch.

A television screen on the floor of the New York Stock Exchange headlines the stock index news at the close of trading, Monday, Feb. 5, 2018. The Dow Jones industrial average plunged more than 1,100 points Monday as stocks took their worst loss in six and a half years. (AP Photo/Richard Drew)

Trader Michael Milano works on the floor of the New York Stock Exchange, Tuesday, Feb. 6, 2018. The Dow Jones industrial average fell as much as 500 points in early trading, bringing the index down 10 percent from the record high it reached on January 26. The DJIA quickly recovered much of that loss. (AP Photo/Richard Drew)

Given the huge stock market sell-off, it seems an opportune time to try to draft you onto Team StayCalm. I’m not saying these thousand-point drops are pretty or painless. But they really need context. So let me try to tick off what is and is not scary about this moment.

Q: Does this mean we’re heading into recession?

A: No! There’s the economy, and there’s the stock market. They’re not the same thing, and the former, which is much more important to people’s well-being -- and, ultimately, the dog that wags the market’s tail -- remains in solid shape. In fact, since most people depend on their paycheck as opposed to their stock portfolio, a triggering event of this sell-off -- the 2.9 percent pop in wage growth from last Friday’s jobs report -- is a good thing. To be honest, no one knows when the next recession will hit, but history is full of stock market routs even bigger than this one that barely dinged the economy’s trajectory. (Continue below.)

A: As I’ll argue below, this is the key question. The wage pop spooked the markets because investors, already skittish as valuations were a bit steep (though not as bad as people have been saying, given strong current and expected corporate earnings), envisioned this sequence: wage growth gooses price growth (i.e., inflation), which raises both market and Federal Reserve interest rates, which slows growth and shaves corporate profit margins. But there are many links in that chain. First, the correlation between wage and price growth has been low in recent years. Second, while market interest rates have ticked up a bit, they’re still low by historical terms. Third, conditional on inflation remaining tame, this sell-off could lead the Fed to be more, not less, patient with rate hikes, as the market itself is pulling back on slightly frothy valuations and boosting interest rates on its own.

Q: But what about those massive earnings losses? What about my 401(k)?

A: The run-up preceding the sell-off has been long and strong, as my colleague Dean Baker at the Center for Economic and Policy Research points out, and as you knew anyway from when President Donald Trump used to talk about the stock market (such talk is, um, on pause for now).

Before inflation (a negative for returns) and dividend payouts (a positive), Baker points out that markets have gone up 14 percent annually since 2009. He writes: “The gains have been even more rapid over the last two years. Even with the recent drop the market is more than 40 percent above its February 2016 level. Most people would have considered it crazy to predict the market would rise by 40 percent over the next two years back in February 2016. In other words, people who have invested heavily in the stock market have nothing to complain about. If they didn’t understand that it doesn’t always go up then they should keep their money in a savings account or certificates of deposit.” OK, that last bit is a little tough love, but he’s right. Trump and Treasury Secretary Steven Mnuchin made a rookie mistake by forgetting this simple truth -- markets don’t just go up -- and, in the name of keeping it real, the sell-off is a useful reminder of that reality.

Q: When should I get worried? What if the sell-off gets worse today?

A: Given the magnitude of the gains noted above, another few days of this won’t be pretty, but they won’t undermine the ongoing expansion in the real economy, meaning jobs, paychecks and gross domestic product growth. A long, persistent bear market can be a problem in that regard, as a negative “wealth effect” can kick in: The persistent decline in asset values starts to pull down consumer spending, which is at the core of the U.S. economy (it’s 70 percent of GDP). But remember this: The value of the stock market is driven by the current and expected profits of the companies owned by their shareholders. Nothing has dented that yet, and, if anything, the tax cut is sure to boost corporate profits, though this is already well-priced into markets. The overreaction to the wage gains is partly the result of the fear that higher labor costs will cut into that profitability, but this, too, is wrong: Workers, not just shareholders, need and deserve to benefit from growth, and that’s something we should come to expect at very low unemployment.

Here’s what you need to do, in my humble opinion. Take your bloodshot eyes off the blood-soaked stock ticker and turn them to inflation indicators. That’s the key variable right now. If it really does accelerate big-time -- I’m not talking about going from around 1.5 to 2.5, which is what I’d expect and even welcome -- but starts rising to rates a lot higher than that, then okay, get worried. That means the economy has reached its capacity and extra activity is not showing up in real stuff like jobs and wages but is just showing up in higher prices. That’s likely to take the Fed from brake-tapping to brake-slamming, and then I too will join you in high anxiety.

Until then, stay cool.

- Bernstein, a former chief economist to Vice President Joe Biden, is a senior fellow at the Center on Budget and Policy Priorities and author of “The Reconnection Agenda: Reuniting Growth and Prosperity.”